U.S.Dollar Rallies Against Yen, Euro

        By James Ramage
        The dollar jumped against the yen and the euro on Wednesday after Federal Reserve Chairwoman Janet Yellen signaled the central bank could raise U.S. interest rates at its April 2015 meeting at the earliest.
        Ms. Yellen's remarks moved forward market expectations for higher interest rates and sent the dollar soaring to 118.65 yen in late afternoon trade, 1.9% higher for the session.
        The euro dropped to $1.2343, down 1.2% for the day.
        The Federal Open Market Committee in its statement delivered a message of patience for raising interest rates. But Ms. Yellen, in her news conference, said the central bank was unlikely to raise rates for the "next couple of meetings" and said she wanted to discourage the idea that the Fed would act only at meetings that are followed by news conferences.
        The Fed's third meeting for 2015 is scheduled for April 28-29 and it won't include a news conference. Ms. Yellen's statement gave the market a timeline for the earliest possible increase in U.S. rates, said Martin Schwerdtfeger, currency strategist at TD Securities.
        "The fact that she explicitly mentioned that policy will not be altered for two meetings, she is implying the third meeting is a go for higher rates," Mr. Schwerdtfeger said. "It does not preclude a rate hike around the end of April, the next scheduled meeting, if economic conditions improve to the point it would warrant a rate hike, and the dollar has gained on that."
        The market had expected the Fed to raise rates around the middle of 2015. Higher interest rates in the U.S. would make the dollar more attractive as it would boost returns on assets denominated in the currency.
        The FOMC kept language in place that U.S. interest rates would remain low for a considerable period. But the central bank acknowledged gains in labor market data, and that the U.S. is making progress toward its goals in inflation and employment.
        The dollar had pared its gains when the FOMC's statement was first released but then soared after Ms. Yellen began to speak to reporters.
        Write to James Ramage at james.ramage@wsj.com
        (END) Dow Jones Newswires

        December 17, 2014 17:15 ET (22:15 GMT)

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